ITO 24(3)(3), MUMBAI V. SHREE BHAGWATI TEXTILE MILLS, MUMBAI

ITA 518/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5065 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H B ENCH, MUMBAI , , !' #$% , !& ! ' BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 518/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR :2007-08 THE ITO-24(3), C-11, 7 TH FLOOR, B.K.C. BANDRA (E), MUMBAI-400 051 SHREE BHAGWATI TEXTILE MILLS, 117,UDYOG NAGAR,PLOT NO. 7, GOREGAON (W), MUMBAI-400 062 ) !& ./ * ./PAN/GIR NO. : AABFS 6653G ( )+ /APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . ! / APPELLANT BY : ` SHRI PITAMBAR DAS ,-)+ / . ! /RESPONDENT BY : SHRI VIMAL PUNMIYA / 01& / DATE OF HEARING :12.11.2013 23( / 01& / DATE OF PRONOUNCEMENT : 20.11.2013 !4 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE COR RECTNESS OF THE ORDER OF THE LD. CIT(A)-34, MUMBAI DT.2.11.2010 P ERTAINING TO A.Y. 2007-08. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE ADDITION OF RS. 29,98,038/- BEING DIFF ERENCE BETWEEN THE ITA NO.518/MUM/2011 2 AMOUNT RE-DEPOSITED IN ACCOUNT AND THE ACTUAL CASH EXPENSES U/S. 68 OF THE ACT. 3. THE ASSESSEE IS A MANUFACTURER OF CLOTHES/FABRIC S AND IS ALSO TRADING IN YARN FABRICS. THE RETURN OF INCOME WAS FILED ON 31.10.2007 DECLARING A TOTAL INCOME AT RS. 86,960/-. THE CASE WAS SELECTE D UNDER COMPULSORY SCRUTINY AND STATUTORY NOTICES U/S. 143(2) AND 142( 1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DEPOSITS OF RS. 34,60,500/-. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN THE CASH WITHDRAWALS OF RS. 19,99,000/-. THE ASSESSEE FILED A DETAILED REPLY EXPLAINING THE CASH AND BANK DEPOSIT/WITHDRAWALS. TO SUPPORT ITS CONTENTION, THE ASSESSEE ALSO FILED A CASH FLOW STA TEMENT WHICH IS EXHIBITED AT PAGE-3 OF THE ASSESSMENT ORDER. IT IS THE CLAIM OF THE ASSESSEE THAT THE DEPOSIT OF RS. 34,60,500/- WAS OUT OF THE TOTAL INFLOW OF RS. 44,55,701/-. THE ASSESSING OFFICER NOTICED THAT TH E ASSESSEE HAS ISSUED CERTAIN POST DATED CHEQUES AND ACCORDING TO THE AO, THE ASSESSEE COULD NOT HAVE ISSUED SUCH POST DATED CHEQUES WHEN IT DOE S NOT HAVE SUFFICIENT CASH IN HAND/BANK. REGARDING CASH WITHDRAWALS OF RS . 19,99,000/-, THE ASSESSEE EXPLAINED THAT THE SAID SUM WAS UTILIZED FOR PAYMENT OF EXPENSES, CREDITORS AND INTER BANK ACCOUNT DEPOSITS . THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS INCURRED EXPENSES IN CASH AT RS. 4,17,000/- ONLY AND HAS PAID RS. 45,000/- PAID TO CREDITORS IN CASH. ACCORDING TO THE AO, THE TOTAL CASH EXPENSES INCURRED BY THE ASSESSE E COME TO RS. 4.62 LAKHS ONLY. THE AO DEDUCTED THIS AMOUNT FROM THE T OTAL CASH DEPOSIT OF RS. 34,60,500/- AND CONSIDERED THE BALANCE AMOUNT O F RS. 29,98,038/- AS CASH SALES OR UNACCOUNTED CASH BROUGHT INTO ACCOUNT AND ADDED THE SAME U/S. 68 OF THE ACT. ITA NO.518/MUM/2011 3 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED THAT THE ASSESSEE HAD SUFFICIENT CASH FL OW OUT OF WHICH THE ASSESSEE DEPOSITED RS. 34,60,500/- IN THE BANK. AF TER CONSIDERING THE FACTS AND SUBMISSIONS OF THE ASSESSEE, THE LD. CIT( A) OBSERVED THAT THE APPELLANT HAS CONCLUSIVELY DEMONSTRATED THROU GH THE BANK STATEMENTS HOW THE CASH IS WITHDRAWN FROM ONE ACCOU NT AND HAS BEEN DEPOSITED IN ANOTHER BANK ACCOUNT AND HOW THE BANK ACCOUNTS ARE DISCLOSED THROUGH THEIR CLOSING BALANCES IN THE BAL ANCE-SHEET FOR THE IMPUGNED ASSESSMENT YEAR WHEREAS THE AO HAS NO MATE RIAL IN HI9S POSSESSION TO SUBSTANTIATE HIS OPINIONS AND HAD PRE SUMED THAT APPELLANT HAD SUPPRESSED ALL THE SALES TO EVADE THE TAX LIABI LITY. SUCH AN ADDITION MADE ON PRESUMPTIONS AND ASSUMPTIONS CANNOT BE SUST AINED IN LAW. THUS, I FIND FORCE IN THE ARGUMENTS AND SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE THAT ALSO HAS BEEN REPRODUCED ABOVE THAT NO ADDITION COULD HAVE BEEN MADE IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. ACCORDINGLY, IN VIEW OF THE ABOVE DISCUSSION, THE I MPUGNED ADDITION OF RS. 29,98,038/- IS DELETED. 5. AGGRIEVED BY THIS FINDING OF THE LD. CIT(A), REV ENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUB MITTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE ONUS CAST UPON IT BY SEC. 68 OF THE ACT INASMUCH AS THE ASSESSEE COULD NOT EXPLAIN THE SOUR CE OF DEPOSITS IN THE BANK ACCOUNT. THE LD. DR STRONGLY RELIED UPON THE FINDINGS OF THE AO. 7. PER CONTRA THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. THE L D. COUNSEL ALSO DREW OUR ATTENTION TO THE VARIOUS PAGES OF CASH BOOKS AN D BANK STATEMENTS BROUGHT AS EVIDENCE IN THE FORM OF PAPER BOOK. IT IS THE SAY OF THE LD. ITA NO.518/MUM/2011 4 COUNSEL THAT EVERY ENTRY IS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH HAS BEEN SUBJECTED TO AUDIT NOT ONLY UNDER THE INCOME-TAX ACT BUT ALSO UNDER VAT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE MATERIAL EVID ENCE BROUGHT ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS MAINTAINI NG PROPER BOOKS OF ACCOUNT WHICH HAS BEEN SUBJECT TO AUDIT. THE ENTIR E TRANSACTIONS OF THE ASSESSEE MUST HAVE BEEN REFLECTED IN THESE BOOKS OF ACCOUNT. IT APPEARS THAT NEITHER OF THE LOWER AUTHORITIES HAVE GONE INT O THIS ISSUE AT LENGTH. IF ON CERTAIN DATE, SOME DEPOSITS HAVE BEEN MADE BY TH E ASSESSEE IN ITS BANK ACCOUNT, THEN THAT ENTRY MUST BE THERE IN THE CASH BOOK FROM WHICH THE SOURCE OF DEPOSITS COULD HAVE EASILY BEEN VERIFIED. IF THE ASSESSEE CLAIMS THAT CASH HAS BEEN WITHDRAWN FROM ONE BANK ACCOUNT TO BE DEPOSITED IN ANOTHER BANK ACCOUNT, THEN SUCH ENTRY BEING CONTRA ENTRY , MUST HAVE FOUND PLACE IN THE CASH BOOK. AS THESE FACTS HAVE NOT BEEN CONSIDERED BY THE LOWER AUTHORITIES, THE LD. CIT(A) HAS SIMPLY BE LIEVED IN THE SUBMISSIONS OF THE ASSESSEE WITHOUT GOING INTO THE BOOK ENTRIES, THEREFORE, IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS RE-VERIFIC ATION AT THE ASSESSMENT STAGE. WE, ACCORDINGLY, RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY THE DEPOSITS BY GOING THROUGH THE ENTRIES IN THE CASH BOOK. THE AO IS ALSO DIRECTED TO VERIFY T HE CONTRA ENTRIES ,IF THERE IS ANY. THE ASSESSEE IS DIRECTED TO PRODUCE BOOKS OF ACCOUNT BEFORE THE AO AND EXPLAIN THE TRANSACTIONS FROM ITS BOOKS OF ACCOUNT DATE-WISE. THE AO IS DIRECTED TO VERIFY SUCH TRANSACTIONS AFTE R GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.518/MUM/2011 5 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013 !4 / 3( &! 5 6 7 20.11.20133 / = SD/- SD/- ( VIJAY PAL RAO ) ( N.K. BILLAIYA ) /JUDICIAL MEMBER !& / ACCOUNTANT MEMBER MUMBAI; 6 DATED 20/11/2013 . . ./ RJ , SR. PS !4 / ,0 >!(0 !4 / ,0 >!(0 !4 / ,0 >!(0 !4 / ,0 >!(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. ? ( ) / THE CIT(A)- 4. ? / CIT 5. @= ,0 , , / DR, ITAT, MUMBAI 6. =A B / GUARD FILE. !4 !4 !4 !4 / BY ORDER, -0 ,0 //TRUE COPY// C CC C / D D D D (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI